How Health Information Exchange (HIE) Helps Eliminate Medicare Fraud

By | October 19, 2016

When Medicare fraud became a frequent feature in the news, particularly following some important revelations in 2015 by the Government Accountability Office (GAO), many Americans assumed that it was a patient problem. It is difficult to believe that the healthcare system, as it operates today in the USA, can allow for a level of corruption where healthcare providers were identified as complicit in 62 percent of fraud cases. Patients, according to the GAO investigation, were deliberately compliant in only 14 percent of cases.

While the implementation of electronic Health Information Exchange (HIE) has been costly, and bemoaned by some of the medical community as labor-intensive, we’ll explain why it is needed, and how it will reduce annual loss to Medicare, and due to other types of healthcare billing fraud.

Understanding Medicare Fraud

The Medicare system operates like a trust-fund, with the objective of providing low cost medical care for America’s senior population. However, the program has come under increasing pressure due to an aging population (Baby Boomers) and a stark increase in fraud, which has grown in the past decade to the extent that it threatens the viability of the program and future Medicare beneficiaries.

When you hear about the billions of dollars in erroneous payments, it can be difficult to imagine the scale and cumulative potential of Medicare fraud. In 2015 alone, GAO estimated a loss of over $60 billion dollars due to fraud.  All reports are estimated, however, as there is no reliable method to accurately record the value of annual healthcare fraud. Tips from patients and practitioners provide some help in reporting instances of administrative or private fraud cases.

In the January 2016 report “Health Care Fraud: Information on the Most Common Schemes and the Likely Effect of Smart Cards,” the GAO examined a sample of 736 cases and discovered:

  • 68 percent of cases involved more than one method or scheme to access payments.  Approximately 61 percent of healthcare fraud cases involved 2-4 difference schemes, and 7 percent involved five or more methods.
  • The majority of Medicare fraud cases are conducted at the place of practice, including clinics, hospitals, and private medical offices. Fraudulent billing accounted for 25 percent of cases.
  • Providing controlled substances (e.g., opioids and narcotics) and mis-branding, labeling, and billing of drugs accounted for 21 percent of fraud cases.

What the data from the GAO’s 2015 investigation demonstrated was that healthcare fraud is a complex system of proven methods that criminals can replicate. The multilevel fraud method also implied that organized crime may play a part in some of the larger, and more widespread cases. It is not a matter of someone capitalizing on an individual Medicare payment alone; it has become a lucrative business.

Unfortunately, healthcare providers and institutions seeking to maximize profit are at the center of the problem. Some of the most common Medicare fraud methods include:

  • Kickbacks for patient referrals.
  • Medical necessity fraud.
  • Over-billing or inaccurate billing or eligibility.
  • Home healthcare and hospice fraud.
  • Prescription drug billing or mislabeling (including narcotics).
  • Medical equipment (and replacement).

In one of the largest legal crackdowns for healthcare fraud in American history, “The Medicare Fraud Strike Force,” a collaborative team that included the Office of the Inspector General, the FBI, the Department of Justice, and the Offices of the United States Attorneys arrested and charged 301 individuals. The June 2016 case successfully named defendants that were responsible for more than $900 million dollars in Medicare fraud, the largest “take down” in the history of the strike force to date. This is evidence of the widespread problem of fraud, and the multilateral cost and threat to the American healthcare system.

Health Information Exchange (HIE) Combats Fraud 

The introduction of electronic Health Information Exchange, or HIE, in the United States has been a difficult transition for the American healthcare industry.  The goal of HIE is not only to improve patient participatory care (by helping them manage their health history, lifestyle, and treatment outcomes) but also to enforce new controls that will better detect healthcare fraud, including fraudulent billing and reducing the burden on the Medicare program.

The U.S. Department of Health and Human Services, Office of the Inspector General released a work plan in 2015 that outlined how the national electronic health information exchange will be used to detect not only current cases of fraud, but to review previous years of data to mine for organized fraud schemes.

Never before in the history of the American healthcare system has data been readily available to government investigators, empowering them to track down fraud at every level.  As hospitals and private practices continue to evolve their use and integration of electronic health records (EHRs), everything from prescriptions to patient notes, and diagnostic machines (which can now be integrated electronically to patient records) will help. As billing is evaluated, fraudulent incentive payment requests and eligibility for health organizations that requested funding for implementing health information exchange can be tracked.

In the future, the U.S. healthcare system may move to unique patient identifiers, or smart cards, which have the potential to virtually eliminate identity fraud. By giving patients access to their health history, including treatment and lab test records, patients will also play an important role in questioning and reporting fraudulent billing and fees. An annual report of services received and benefits paid can be requested by any patient, including Americans who are covered by the program, helping to reduce Medicare fraud cases.

Over time, the electronic Health Information Exchange will reduce medical identity theft, encourage patients to participate in fraud prevention, and help tighten financial and billing accountability for healthcare providers. Healthcare data will systematically track and report fraud, saving the healthcare system billions of dollars per year, and ensuring that healthcare funds remain where they are needed most for quality patient care.

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